M/s Ortel Communications Ltd., New Delhi v. DCIT, New Delhi

ITA 5068/DEL/2010 | 1997-1998
Pronouncement Date: 28-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 506820114 RSA 2010
Bench Delhi
Appeal Number ITA 5068/DEL/2010
Duration Of Justice 2 month(s) 10 day(s)
Appellant M/s Ortel Communications Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 28-01-2011
Date Of Final Hearing 20-01-2011
Next Hearing Date 20-01-2011
Assessment Year 1997-1998
Appeal Filed On 18-11-2010
Judgment Text
I.T.A. NO. 5068/DEL/10 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 5068/DEL/2010 ASSESSMENT YEAR : 1997-98 M/ ORTEL COMMUNICATION LTD. DCIT B-7/122A SAFDARJUNG ENCLAVE CO. CIRCLE-13 (1) NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACO AAACO AAACO AAACO- -- -1004 1004 1004 1004- -- -B BB B APPELLANT BY : SHRI YOGESH JAGIA ADVOCATE. RESPONDENT BY : SHRI PEEYUSH SONKAR SR. DR. ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)- XVIII NEW DELHI DATED 16.9.2010 FOR ASSESSMENT YEAR 1 997-98. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN UPHOLDING THE TAXABILITY OF SHARE CAPITAL RECEIVED AS INCOME OF APPELLANT U/S 68 OF THE ACT TO THE EXTENT OF `.3 35 000/-. 2. THAT THE APPELLANT CRAVES LEAVE OF THIS HON'BLE COURT TO AMEND ALTER THE GROUNDS OF APPEAL BEFORE HEARING. 3. THE FACTS OF THE CASE ARE NOTED BY THE LD CIT(A) IN PARA NOS. 4.1. 4.2 AND 5 OF HIS ORDER WHICH ARE REPRODUCED BELOW:- . I.T.A. NO.5068/DEL/10 2/7 4.1. THE APPELLANT COMPANY DURING THE ASSESSMENT YEAR 1997- 98 RECEIVED SHARE CAPITAL OF `.23 00 000/- AGAINST WH ICH 2 30 000 SHARES WERE ALLOTTED AT `.10/- EACH. IN THE ORIGINAL ASSESSMENT U/S 143(3) COMPLETED ON 31.3.2000 THE ASSESSING OFFICER ADDED THE ABOVE AMOUNT OF `.23 00 000/- AS UNEXPLAINED CAS H CREDIT U/S 68 OF THE ACT. ON FIRST APPEAL FILED BY THE APPELLAN T THE LD CIT(A) XVI NEW DELHI VIDE ORDER IN APPEAL NO.44/00-01 DA TED 23.8.2002 DELETED THE ADDITION TO THE EXTENT OF `.1 1 70 000/- AND CONFIRMED THE BALANCE ADDITION OF `.11 30 000/-. ON SECOND APPEAL FILED BY THE APPELLANT AGAINST THE ABOVE ORDE R OF LD CIT(A) THE HON'BLE ITAT NEW DELHI BENCH G VIDE ORDER IN I.T.A. NO. 4924/DEL/2002 DATED 31.1.2006 SET ASIDE THE ADDITION CONFIRMED BY THE LD CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR PASSING A FRESH ORDER AFTER MAKING NECESSARY EXAMINATION AND AFTER ALLOWING OPPORTUNITY ON BEING HEARD TO THE ASSESSEE INCLUDING THE OPPORTUNITY OF CRO SS EXAMINATION WHEREVER REQUIRED. THE DIRECTIONS OF THE HON'BLE ITAT CONTAINED IN PARA 4.1. OF THE ORDER IS REPRODUC ED HEREUNDER:- 4.1. IN THE CASE OF THE ASSESSEE ADDITIONS HAVE BEEN CONFIRMED IN CASES WHERE THE SHARE HOLDERS HAD NOT RESPONDED TO THE LETTERS ISSUED BY THE ASSESSING OFFICER OR THE LETTERS WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES OR IN CASES WHERE THE SHARE HOLDERS DENIED HAVING BEEN MADE ANY INVESTMENT. THE CLAIM OF THE ASSESSEE THAT IT HAD NOT BEEN GIVEN OPPORTUNITY TO CROSS EXAMINE THE SHARES HOLDERS WHO HAD DENIED HAVING MADE INVESTMENT IN THE SHARES HAS NOT BEEN CONTROVERTED BY T HE DEPARTMENTAL REPRESENTATIVE. THE OPPORTUNITY FOR CRO SS . I.T.A. NO.5068/DEL/10 3/7 EXAMINATION IS THEREFORE REQUIRED TO BE GIVEN TO THE ASSESSEE. IT IS ALSO A FACT EVIDENCED FROM THE PAPERS FIL ED IN THE PAPER BOOK THAT THE ASSESSEE HAD FILED EVIDENCE OF IDENTITY ETC. IN SOME CASES WHERE THE SHARE HOLDERS HAD NOT RESPONDED AND IN SOME CASES CONFIRMATIONS WERE OBTAINED BY THE ASSESSEE AND FILED BEFORE THE CIT(A). THESE HAVE NOT BEEN ACCEPTED ON THE GROUND THAT THE SHAREHOLDERS THEMSELVES HAD NOT REPLIED TO THE LETTER ISSUED BY THE ASSESSING OFFICER. THOUGH THE SHAREHOLDERS HAD NOT RESPONDED IN THESE CASES TO THE INQUIRY LETTER S ISSUED BY THE ASSESSING OFFICER FURTHER MATERIAL PRODUCED IN THE FORM OF CONFIRMATION OR EVIDENCE OR IDENTITY CANNOT BE REJECTED OUTRIGHT. THESE CASES IN OUR VIEW REQUIRE FURTHER EXAMINATION AS THE SHAREHOLDERS IN MANY CASES HAVE DENIED HAVING MADE ANY INVESTMENT IN THE SHARES O F THE COMPANY. THUS THE ADDITION CONFIRMED BY THE CIT( A) IN THE CASES WHERE THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE INVESTORS WHO HAD DENIED HAVING MADE INVESTMENT IN SHARES AND ALSO THE CASES WHERE THE ASSESSEE HAD FILED EVIDENCE OF IDENTITY OR OBTAINED CONFIRMATIONS SUBSEQUENTLY AND FILED BEFORE CIT(A) A RE SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSE SSING OFFICER FOR PASSING A FRESH ORDER AFTER MAKING NECESSARY EXAMINATION AND AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE INCLUDING THE OPPORTUNITY OF CROSS EXAMINATION WHEREVER REQUIRED. 4.2. PURSUANT TO THE ABOVE ORDER OF THE HON'BLE ITAT THE ASSESSING OFFICER HAS PASSED THE IMPUGNED ORDER U/S 254/14 3(3) DATED 28.12.2006 WHEREIN HE HAS AGAIN ADDED THE ABOV E AMOUNT OF `.11 70 000/- U/S 68 OF THE ACT. AS PER THE ABOV E ASSESSMENT . I.T.A. NO.5068/DEL/10 4/7 ORDER THE ASSESSING OFFICER ISSUED NOTICED DATED 6.11.20 06 DIRECTING THE APPELLANT TO FILE COMPLETE SET OF DETA ILS/EVIDENCES/ INFORMATION FILED BEFORE THE LD CIT(A) SVI NEW DE LHI AND THE HON'BLE ITAT. THE ASSESSING OFFICER ON 15.11.2006 DIREC TED THE APPELLANT TO FURNISH LATEST ADDRESSES SO AS TO ISSUE NOTICE S U/S 131 FOR CROSS EXAMINATION. THE ASSESSING OFFICER ISSUED NOT ICE TO TEN INDIVIDUALS WHO HAD DENIED HAVING INVESTED WITH T HE APPELLANT COMPANY OUT OF WHICH EIGHT NOTICES WERE RE CEIVED BACK UN-SERVED. THEREFORE ON 18.12.2006 THE ASSESSING OFFI CER ASKED THE APPELLANT TO FURNISH FRESH CONFIRMATIONS OF CASES WHERE NOTICES HAVE BEEN RETURNED OR NO RESPONSE WAS RECEIVED. THE APPELLANT FILED ITS DETAILED SUBMISSIONS ON 27.12.2006. HOWEVER THE ASSESSING OFFICER ON 18.12.2006 ISSUED NOTICES TO ALL THE SUBSCRIBERS OF THE SHARE CAPITAL AND PASSED THE ORDER ON 28.12.2006 CONFIRMING THE ADDITION OF `.11 70 000/- . 5. DURING THE COURSE OF APPELLATE PROCEEDING IT IS A RGUED BY THE LD AR VIDE WRITTEN SUBMISSIONS THAT THE ASSESSING OFFICER EXCEEDED THE DIRECTIONS ISSUED BY THE HON'BLE ITAT BY ISSUING NOTICES TO ALL THE APPLICANTS. IT IS FURTHER CONTENDED THAT THE ASSESSING OFFICER HAS NOT GIVEN SUFFICIENT TIME TO APPLIC ANTS TO RESPOND AS THE ASSESSMENT ORDER WAS PASSED ON 28.12.2006 THOUGH NOTICES WERE SENT ONLY ON 18.12.2006. THE LD A R HAS ALSO FILED A PAPER BOOK CONTAINING DETAILS OF SUBSCRIPTION OF CAPITAL IN DISPUTE WITH DETAILS OF PAYMENTS AND DOCUMENTS AVAILABL E ON RECORD. ON PERUSAL OF THE LIST IT IS NOTICED THAT APP ELLANT FAILED TO PROVIDE CONFIRMATION IN RESPECT OF 11 SUBSCRIBERS OF CA PITAL TOTALING `.3 35 000/-. FOLLOWING THE DIRECTIONS OF T HE HON'BLE ITAT I FIND THAT THE ABOVE AMOUNT OF `.3 35 000/- REMAIN S UNEXPLAINED AND HENCE I CONFIRM THE ADDITION TO THE EXTENT OF T HE ABOVE `.3 35 000/-. . I.T.A. NO.5068/DEL/10 5/7 4. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT IS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT AS D IRECTED BY THE TRIBUNAL IN THE FIRST ROUND THE ASSESSING OFFICER H AS NOT ALLOWED CROSS EXAMINATION TO THE ASSESSEE OF ALL THOSE SHARE APPLIC ANTS WHO HAD ALLEGED TO HAVE DENIED REGARDING GIVING SHARE AP PLICATION MONEY TO THE ASSESSEE COMPANY. IT IS ALSO SUBMITTED THAT ON PAG E NO.4 OF THE PAPER BOOK IS THE COMPLETE DETAILS OF THESE SHARE APPLI CANTS FROM WHOM THIS AMOUNT OF `.3.35 LAKHS HAS BEEN RECEIVED BY THE ASSESSEE ALONG WITH DISTINCTIVE NUMBER OF SHARES ISSUED TO THEM. WHEN IT WAS POINTED OUT BY THE BENCH THAT THE DISTINCTIVE NUMBER OF SHARES REGARDING AMOUNT OF `.25 000/- RECEIVED FROM MR. YO GAMURTI KOIRALA AND REGARDING AMOUNT OF `.40 000/- RECEIVED FROM MI SS ANKITA MEHTA ARE NOT THERE ON THIS PAGE OF THE PAPER BOOK IT WA S SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THE SAME ARE NOT AVAILABLE BECAUSE THE RELEVANT RECORDS ARE NOT READILY AVAILABLE. IT IS ALSO SUBMITTED THAT SUPPORTING DOCUMENTS REGARDING IDENTITY OF SHARE APPLI CANTS ARE AVAILABLE IN THE PAPER BOOK AND SINCE THE CROSS EXAMI NATION HAS NOT BEEN PROVIDED BY THE ASSESSING OFFICER THE ADDITIONS MA DE BY THE ASSESSING OFFICER SHOULD BE DELETED. 6. AS AGAINST THIS LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS IS A FACT THAT IN THE FIRST ROUND THE TRIBUNAL HAS RESTORED BACK THIS ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AFTER PROVIDING TH E OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THOSE SHARE APPLICANTS WHO H AD DENIED THAT THEY HAVE GIVEN THE AMOUNT IN QUESTION TO THE A SSESSEE COMPANY TOWARDS SHARE APPLICATION. IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AS PER THE TRIBUNAL DIRECTION IT HAS BEEN NOTED BY THE ASSESSING OFFICER THAT SHOW CAUSE NOTICE WAS ISSUED TO T HOSE SHARE APPLICANTS TO PROVIDE THE OPPORTUNITY TO THE ASSESSEE FO R CROSS . I.T.A. NO.5068/DEL/10 6/7 EXAMINATION BUT NONE OF THEM HAD APPEARED. THE ASSESSIN G OFFICER ASKED THE ASSESSEE TO FURNISH FRESH CONFIRMATION BUT THE A SSESSEE COULD NOT DO THE SAME BECAUSE THEY WERE NOT AVAILABLE ON THE ADDRESS AS PER THE RECORD. THE ADDITION WAS MADE BY THE ASSESSIN G OFFICER ON THIS BASIS THAT THOSE SHARE APPLICANTS HAVE DENIED REGAR DING PAYMENT OF AMOUNT IN QUESTION BY THEM TO THE ASSESSEE COMPANY TO WARDS SHARE APPLICATION MONEY BUT WE FIND THAT IT WAS THE OBLIGA TION ON THE PART OF THE ASSESSING OFFICER TO ALLOW THE ASSESSEE THE OPPORTUNIT Y TO CROSS EXAMINE THEM BUT THIS COULD NOT BE DONE BY THE ASSESSING OFFICER BECAUSE THOSE SHARE APPLICANTS WERE NOT FOUND AVAILABLE AT THE ADDRESS AVAILABLE ON RECORD. NOW UNDER THESE FACTS W E EXAMINE THE CASE OF THE ASSESSEE AFTER IGNORING SUCH DENIAL BY THE SHA RE APPLICANTS BECAUSE IN THE ABSENCE OF PROVIDING OPPORTUNITY TO CR OSS EXAMINE SUCH SHARE APPLICANTS THEIR STATEMENT CANNOT BE TAKEN INT O CONSIDERATION FOR MAKING ADDITION. WE EXAMINE THE DETAILS SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK BEFORE US. WE FIND THAT REGAR DING TWO SHARE APPLICANTS I.E. YOGAMURTI KOIRALA OF `.25 000/- AND MISS ANKITA MEHTA FOR `.40 000/- THE ASSESSEE COULD NOT GIVE EVEN THE BA SIC INFORMATION I.E. DISTINCTIVE NUMBER OF SHARES ALLOTTED TO THEM. H ENCE WITH REGARD TO THESE TWO PERSONS INVOLVING AN AMOUNT OF `.65 000/ - WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE ASSESSI NG OFFICER IS JUSTIFIED AND NO INTERFERENCE IS CALLED FOR IN THE OR DER OF LD CIT(A) TO THIS EXTENT. REGARDING THE REMAINING SHARE APPLICANTS INVOLVING THE AMOUNT OF `.2.70 LAKHS WE FIND THAT THE ASSESSEE HAS FU RNISHED COMPLETE DETAILS INCLUDING DISTINCTIVE NUMBER OF SHARE S ISSUED TO THEM. IT IS ALSO SUBMITTED BY THE ASSESSEE THAT THE MONEY WAS RE CEIVED BY THE ASSESSEE COMPANY FROM THEM BY WAY OF ACCOUNT PAYEE CHEQUE/DRAFT. THE ASSESSEE HAS ALSO FURNISHED EVIDENCES R EGARDING THEIR IDENTITY. FOR THE FIRST PERSON SHRI SK JAIN T HE ASSESSEE HAS FURNISHED THE COPY OF IDENTITY CARD ISSUED BY THE DDA BECAUSE THAT PERSON WAS WORKING AS AN ENGINEER WITH THE DDA. FOR THE REMAINING . I.T.A. NO.5068/DEL/10 7/7 PERSONS ALSO THE ASSESSEE HAS FURNISHED THE PROOF OF IDENT ITY ETC. THE ASSESSING OFFICER COULD NOT PROVIDE AN OPPORTUNITY TO C ROSS EXAMINE THE ASSESSEE AND MORE THAN 13 YEARS HAVE ELAPSED AND THER EFORE THERE IS NO POINT OF RESTORING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR ALLOWING CROSS EXAMINATION TO THE A SSESSEE AND HENCE CONSIDERING ALL THE FACTS IN THE PRESENT CASE IN ITS ENTIRETY AND IN VIEW OF THE SMALLNESS OF THE AMOUNT AND CONSIDERING THESE FACTS THAT THE AMOUNTS WERE RECEIVED BY WAY OF A/C PAYEE CHEQUE AND SHARES WERE ALLOTTED BY THE ASSESSEE TO THEM AND NO ADVERSE MAT ERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT TH ESE SHARES WERE PURCHASED BACK BY THE PROMOTERS OF THE ASSESSEE COMP ANY WE DELETE THIS ADDITION OF THE BALANCE AMOUNT OF `.2.70 LAKHS. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE 28 TH DAY OF JANUARY 2011. SD/- SD/- (I.P. BANSAL) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 28.1.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI).